What is the meaning of the net worth of a person? For example,
- How do I find out my net worth?
- Bill Gates's net worth is $86.0 billion. Does that mean Bill Gates can give/donate $86.0 billion to anyone tomorrow?
asked Aug 15, 2017 at 4:21
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Also note that the $86M is an estimate of his net worth. Only his public assets are known, so any non-public assets and debts are not included, and the net total (assets - debts) is assumed to be negligible (relative to the 86M). He could sink a $30M yacht and not significantly change his net worth.– D StanleyAug 15, 2017 at 15:25
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1 Answer
An individual's net worth is the value of the person's assets minus his debt.
To find your net worth, add up the value of everything that you own: your house, your cars, your bank accounts, your retirement investments, etc. Then subtract all of your debt: mortgage, student loans, credit card debt, car loans, etc. If you sold everything you own and paid off all your debts, you would be left with your net worth.
If Bill Gates' net worth is $86 Billion, he likely does not have that much cash sitting in the bank. Much of his net worth is in the form of assets: stocks, real estate, and other investments. If he sold everything that he has and paid any debts, he would theoretically have the $86 Billion. I say "theoretically" because in the amounts of stock that he owns, he could cause a price drop by selling it all at once.
answered Aug 15, 2017 at 4:36
Ben Miller - Remember MonicaBen Miller - Remember Monica
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Ohhhhh I think I have ( - ) net worth after reducing loans.... Aug 15, 2017 at 4:48
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2@DonkeyKing That's quite likely. The bottom 10% globally have negative net worth, and the next 10% don't have enough positive net worth to counterbalance that, leading to the amusing conclusion that the poorest person in the world is still richer than the bottom 20% put together. Aug 15, 2017 at 4:58
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And by the same logic, most of the poorest people in the world live in First World countries. It''s very hard to get $50K in debt in most countries - who is going to lend you that much money? Yet students in Western countries can get such loans.– MSaltersAug 15, 2017 at 17:13
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Does net worth also take into account taxes that would need to be paid on asset sales? A lot of Bill Gates' net worth is tied up in stock, which will incur some tax liability if he sold it...– BobTAug 15, 2017 at 17:46
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1@MSalters: I don't know if poor applies here. If you make $100K per year, have assets of $500K and debt of $600K are you actually poorer than someone with no debt making $1 per day? Aug 15, 2017 at 20:42